OWNERS AT WORK - Welcome! - OEOC of an MBA or Undergraduate Business Major Intern from Kent State’s School ... Make each event you plan count and ... OWNERS AT WORK Summer 2010

OWNERS AT WORKthe magazine of the

Ohio Employee Ownership CenterVolume XXII No. 1 Summer 2010

Xtek’s 25 Years

2 Owners At Work Summer 2010

OWNERS AT WORKEditor

Jacquelyn Yates • [email protected]

Staff WritersJim Anderson • [email protected]

Steve Clem • [email protected] Cooper • [email protected] McIntyre • [email protected] Messing • [email protected] Simecek • [email protected]

Karen Thomas • [email protected]

Layout & DesignChris Cooper, Olga Klepikova &

Jacquelyn Yates

Staff of the OEOC are not licensed attorneys, tax professionals, valuators, or any other profession requiring licensing, and therefore, nothing in this newsletter should be construed to be legal, tax, valuation, accounting or financial advice. Please see your professional advisor for guidance on the specifics of your situation.

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Owners At WorkOhio Employee Ownership Center

113 McGilvrey HallKent State University

Kent OH 44242330-672-3028

[email protected]

Cover photos courtesy of Xtek, Inc.

Owners At Work (ISSN 1046-5049) is published twice a year by the OEOC. Copyright © Ohio Em-ployee Ownership Center of Kent State Univer-sity. Letters, articles, requests for permission to reprint and subscriptions (which are free) should be sent to the editor. Owners At Work is funded in part by the Ohio Department of Develop-ment Labor-Management Cooperation Program.

The OHIO EMPLOYEE OWNERSHIP CENTER (OEOC) is a university-based program that pro-vides information and technical assistance to retir-ing owners, buyout committees, labor unions, man-agers, and community development organizations interested in exploring employee ownership. Cen-ter staff can help locate competent and appropriate legal and financial advisors, and perform initial as-sessments to determine whether employee owner-ship is a viable option. The OEOC develops resource materials on employee ownership and participation systems, sponsors workshops and conferences for the general public, develops and delivers training programs for employee owners, facilitates coopera-tion among employee-owned firms, coordinates a comprehensive succession planning program, con-ducts research and assists international efforts to privatize businesses through employee ownership.

The OEOC is funded by grants from the Ohio Department of Development and its Office of Labor/Management Cooperation, as well as contributions from Kent State University, Friends of the Center, and the companies that comprise Ohio’s Employee-Owned Network.

Publisher’s Note

This issue represents one great celebration—a celebration of people going forward with many visions of employee ownership–most importantly, there are the employee owners, but there are also the people who nurture employee ownership and the people who advise and assist in implementing and continuing it. All carry parts of the vision around in their heads and hearts, and even in their wallets and bank accounts. This is pretty amazing, considering that financial events of the prior year chilled hearts everywhere in the world, and many wondered how many employee-owned companies would be weakened or worse. Whatever you choose to call the Crash, the Downturn, or the Great Recession, there’s no denying that few firms or individuals were entirely spared.

But in spite of all that, employee-owners continued working to make things better for themselves in the great tradition of private enterprise. We mention briefly and recommend for further reading Phillip Swagel and Robert Carroll’s research on the success of S-Corp firms compared to all U.S. firms.

No firm better exemplifies the resourcefulness and energy of a well-managed employee-owned firm than EBO group, which relentlessly and resourcefully developed new markets and new products that turned its bottom line from red to black. EBO then generously shared the knowledge of how they did it with other Ohio firms. Another great company success story comes from keynoter Kyle Seymour, CEO of Xtek, who confesses many mistakes made in developing the ESOP, but things turned out well in the end. From Rep. Betty Sutton’s keynote address to the 24th annual OEOC conference and from Bruce Herman at the NY Department of Labor, we hear that government officials see employee ownership as part of the solution. That is an important part of the vision, too.

Finally, to judge by the strong attendance at this year’s OEOC Conference, interest in employee ownership remains strong. The day was filled with well-attended panels for employee-owners, including a track on cooperatives, and the day before the conference offered several panels for cooperatives as well.

KSU MBAs Seek Internships in ESOPs

Would your company benefit from doing a special project this summer with the help of an MBA or Undergraduate Business Major Intern from Kent State’s School

of Business? If your answer is yes, contact OEOC staff member Ashley Hernandez at 330-672-3028 or [email protected] .

Table of ContentsOhio ESOP News/Employee Ownership News 3-5

One Way to Kill an ESOP Ownership Culture 6

“Xtek: Our Rocky Road to Success” - Kyle Seymour 7

“Can We Have Enfranchised Workers and a Successful Business?” - Betty Sutton

10

Friends of the Center Honor Roll 11

Recap of the 24th Annual Ohio Employee Ownership Conference: Going Forward With A Vision 12

“Mitigating the Great Recession with Employee Ownership” - Bruce Herman

14

My ESOP Has Terminated: When Do I Get My Money? 15

Network News 16

The Business Succession Planning Page 17

Ohio’s ESOP Top 50 18-19

Co-Sponsors 20-23

3Owners At Work Summer 2010

CTL’s Jessica Donley is Ohio’s 2010 Employee Owner of the Year

Jessica Donley, Senior Marketing Coordinator at CTL Engineering,

is Ohio’s 2010 Employee Owner of the Year for the OH/KY Chapter of The ESOP Association. “Employee ownership is meaningful to me,” she explained, “because I feel like I make a difference each and every day and my opinion is valued. We are all in it together good or bad.” She has served on CTL’s ESOP Communi-cations Committee since 2004, and along with Dawn Pressler and Becky Carroll, creates fun ways to commu-nicate about the ESOP to CTL’s 250 employees.

As she advises the communication teams at other ESOPs, “an ownership culture doesn’t happen overnight. It’s a slow process that needs to be nurtured. Make each event you plan count and try to get the most out of it.” CTL En-gineering is an 82% ESOP-owned en-gineering and testing firm, headquar-tered in Columbus, with nine offices in three states.

EBO Group is Ohio’s 2010 Em-ployee Owned Company of the Year

EBO Group is the 2010 Employee Owned Company of the Year for

the OH/KY Chapter of The ESOP As-sociation. The award recognizes EBO Group for its commitment to an em-ployee ownership culture, its leader-ship and promotion of ESOPs, and its dedication to the vision of The ESOP Association.

EBO stands for ‘Excellence by Own-ers.’ The company strives to promote entrepreneurship and teamwork, and provide everyone with opportunities for personal growth and involvement in company improvements and inno-vations.

Based in Sharon Center, EBO is 100% employee-owned by 67 employ-ee-owners who work together in four employee-owned subsidiaries: PT Tech (clutches and brakes for extreme ma-chines); TransMotion Medical (medical stretcher-chairs); IPESsol (solar mo-bility devices); and eZEhybrid Drives (electric hybrid drives).

Palmer-Donavin Wins Group Excellence Award

Palmer-Donavin’s ESOP Commu-nication Committee, the winner of

the 2010 Group Excellence Award for the OH/KY Chapter of The ESOP As-sociation, has a challenge to educate the firm’s 275 employees since the ESOP’s 100% buyout of the company in 2007. Headquartered in Columbus, the firm has five branch locations in Ohio and Indiana. Palmer-Donavin is a whole-sale distributor of residential building material supplies and heating and cool-ing equipment.

“Our committee consists of nine people taken from the general popu-lation who serve for three years,” ex-plained HR Manager, Shawn Richard. “Because the members of the commit-tee are regular employees, I think and hope that employees are comfortable approaching them with questions. We advertise who is on the committee on a regular basis to increase awareness.”

Each committee member has to write an annual article for The Owner’s Manual quarterly newsletter. It includes articles by the sales team and others on current events, customer updates and business outcomes. Other features in-clude “ESOP Mechanics,” which ex-

plains various topics like diversification and vesting, and an “Ask a Manager” column.

The committee recently started printing ESOP Bucks that employees earn when they participate in ESOP events and other activities. They can spend their bucks on company hats, lawn chairs, coolers, and gym bags.

Janotta & Herner Wins National AACE Honors for ESOP Video

Janotta & Herner Inc., a design/build contractor in Monroeville, won first

place honors for Audio-Visual in the 2010 AACE awards sponsored by The ESOP Association to recognize out-standing efforts in ESOP communica-tion. Produced by Steve Dendinger of Janotta & Herner, the video highlighted the benefits of the ESOP and was dis-tributed to JHI employees and their families to help them better understand their ESOP.

Using a dairy farm theme because many JHI employees come from rural backgrounds, the video portrays em-ployees as farm hands and milk as their profits. The farm-related analogies and barnyard humor made the video mean-ingful and fun.

Janotta & Herner is 100% employ-

Ohio ESOP News

Palmer-Donavin accepts Group Excellence Award: From left to right: Robyn Pollina, Greg Mc-Millan, Paul Turner (holding the award), Marshall Dauberman, Wes Millet and Nick Dwert-man. (Photograph is provided courtesy of the Ohio / Kentucky Chapter - ESOP Association.)


Employee Ownership News

ee owned and employs 130 people. The ESOP was established in 2000 and the company will celebrate 50 years in business next year. Janotta & Herner Inc. won The ESOP Association’s OH/KY Chapter Group Excellence Award in 2008.

World’s First Professorship in Employee Ownership Endowed at Rutgers

The Foundation for Enterprise De-velopment (FED) has committed

$2 million---the largest gift in the his-tory of Rutgers University’s School of Management and Labor Relations (SMLR)—to establish the J. Robert Beyster Professorship of Employee Ownership.

The Beyster Professorship is SM-LR’s first endowed professorship and, as far as can be determined, it is the first named chair in employee owner-ship established anywhere, according to SMLR Dean David Finegold.

Dr. Beyster, who founded hugely successful SAIC Inc. in 1969, estab-lished the Foundation for Enterprise Development in 1986 to help promote the concept of broad-based, participa-tive employee ownership and entrepre-neurism. He currently serves as chair of the foundation.

Leading EDGE Names Six Award-Winning ESOPs

Six of the 86 winners of the Leading Edge Awards for 2010 are ESOPs.

They are Delta Systems, EBO Group Inc., Falcon Industries, Garland Indus-tries, Plasticolors and Rable Machine. The award recognizes northeast Ohio middle market companies that are highest in compensation, earnings, and local purchasing—all factors that create value for the local economy. Despite the downturn, winners showed resil-ience and the ability to innovate, grow and create value.

The Leading EDGE featured com-pany this year was EBO Group, a win-ner in several past years. At the awards dinner, company founder Dave He-idenreich gave the keynote presenta-tion on his companies’ strategies for success through employee ownership and success sharing. Dave started an

EBO or Excellence-by-Objective Pro-cess in 1984, focusing each employee on ideas for individual and company growth. He established the ESOP in 1990.

Ross Group Forms an ESOP

Ross Group, Inc., a software develop-ment and information technology

services firm in Beavercreek, OH, has formed an employee stock ownership plan that will provide the 50 employees with just under 25 percent ownership in the company. According to Mark Ross, company President and CEO, “while a shareholder’s need to exit the company created an immediate incen-tive, the creation of an ESOP also was driven by a long-term desire to provide an exit strategy for the remaining own-ers as they neared retirement age.”

Ross Group has offices in Beaver-creek and Atlanta. According to an article in the Dayton Daily News, about a third of the university teaching hos-pitals of veterinary medicine in North America the company’s veterinary management software helps manage. It also holds contracts with motor clubs and the U.S. Department of Defense.

S-Corp ESOPs Flourish in Downturn

A recent paper by Phillip Swagel and Robert Carroll of Georgetown

University reports that S-Corp ESOPs have show exceptional resilience and preserved their stock value notably bet-ter than typical U.S. corporations, even showing growth when conventional firms were losing value.

The ESOP Promotion and Im-provement Act of 2010 Intro-duced in US House

On May 12, 2010, Congressman Charles Boustany from Louisi-

ana and Congressman Earl Pomeroy of North Dakota introduced the ESOP Promotion and Improvement Act of 2010 to the House of Representatives. The bill was referred to the House Ways and Means Committee and also to the House Small Business Committee.

H.R. 5207 proposes to improve the 1042 ESOP tax deferred rollover pro-visions by permitting sellers to an S

corporation ESOP to use the ESOP tax benefit referred to as the 1042 rollover. The bill would also clarify technical is-sues related to 1) how proceeds from a sale to an ESOP may be reinvested and 2) the treatment of dividends. The bill is an important step to broaden employee ownership in the U.S.

“ESOPs continue to be a critical component of improving American competitiveness and helping to cre-ate jobs here at home, and this bill im-proves options for employees to partici-pate in these plans,” said Congressman Boustany.

News from the National Center for Employee Ownership

At the NCEO/Beyster Institute Annual Conference in Minneapolis, NCEO Board Chairs Cecil Ursprung and Victor Aspengren announced that the Board had selected Loren Rodgers, presently the NCEO’s research direc-tor, to become the new executive direc-tor starting at the 2011 annual meeting that will be held April 13-15 in Denver. Rodgers will be replacing long-time executive director Corey Rosen. Rosen expects to work part time as a volunteer NCEO staff member.

Rable Machine Wins OEOC Award for “Growth and Suc-cess During the Storm”

Rable Machine in Mansfield was recognized with the 2010 Ohio

Employee Ownership Award for their growth and success during the Great Recession. A 100% employee-owned precision machining company, Rable also celebrates 20 years of employee ownership in 2010.

The 75 employee-owners of Rable recognized the need for continuous im-provement about 5 years ago and began to diversify their business and develop new customers. They have more than doubled their business and invested over $5 million in higher technology equipment supported by adoption of lean manufacturing and cellular manu-facturing philosophies. By improving quality and customer service, Rable in-creased sales output per employee by as much as 53%.

A recent achievement is their ISO


9001:2008 certification to better serve their 100+ customers in aerospace, medical, oil and gas, pumps, air conditioning and after-market motor-cycles.

Another recent achievement is the pur-chase of a larger build-ing in a newer industrial park near the Mansfield airport. They upgraded electrical power service to the facility and sig-nificantly improved the product flow to reduce costs through greater ef-ficiency.

Rable was recog-nized among the “Top 25 in Growth” of northeast Ohio’s Leading EDGE Award winners in 2008, as measured by return to share-holders, average earnings and employ-ee compensation, as well as regional business support. They won Leading EDGE Award recognition in both 2009 and 2010 and have also been spotlight-ed within the machining industry.

Rable’s ESOP is the foundation of their continued success in difficult times. Employee owners at Rable share in opportunities for education, involve-ment in teamwork and mentoring others, in governance and in success through gainsharing, profit-sharing and the ESOP.

2010 John Logue Employee Owner-ship Excellence Award: EBO Group

In memory of OEOC founder John Logue,

who passed away in De-cember 2009, the staff of the Ohio Employee Ownership Center initi-ated the John Logue Em-ployee Ownership Excel-lence Award to be made annually to the person, organization or company that has made the largest contribution to employee

ownership in Ohio during the past year. For 2010, the John Logue Employ-ee Ownership Excellence Award recipi-ent is EBO Group, Inc.

The 69 employee-owners of EBO Group, Inc., in Sharon Center, and its subsidiaries, PT Tech, TransMotion Medical Inc., IPESsol Inc., and eZE-hybrid Drives, own 100% of the com-pany through an ESOP established in 1990. “EBO” stands for “Excellence by Owners.”

John Logue’s life work was to estab-lish a statewide system of economic de-velopment in which employee-owned companies could be created and flour-

ish. EBO Group created its “EBO Process,” a system by which em-ployee ownership and innovation can flourish through each employ-ees’ focus on individual and company growth. With the evolution of EBO Group’s owner-ship culture, the com-pany has become an incubator for launching entrepreneurial start-up businesses.

The use of employ-ee ownership to facili-tate innovation does not end at the walls of the company’s offices. EBO Group reached out to local business

development groups and public uni-versities to partner with them in iden-tifying promising new business for the company and its employee-owners.

EBO Group makes a large effort to spread the knowledge they have gained to other ESOPs. They hosted a Network CEO/CFO Dinner about part-nering possibilities and spoke at the Network’s leadership breakfast about how their ownership culture facilitated innovation. They frequently speak at conferences. They hosted a business roundtable with Congressman John

Boccieri to educate him about employee owner-ship. In the process, the non-ESOP owned com-pany representatives

at the roundtable also received a strong dose of employee ownership education.

EBO’s CEO Keith Nichols is on the Advi-sory Board of the Ohio/Kentucky ESOP Chap-ter of The ESOP Asso-ciation and has been for many years. Company founder Dave Heiden-reich is on the Advisory Board of the OEOC and serves on its Executive Committee. OAW

Employee Ownership News

The Rable Machine award winners: (l to r) Bob Shutt, Carolyn Long, Scott Carter, Lisa Stevens, Dan Cooper, and Chris Cooper.

The EBO Group award winners: (l to r) Ryan Pinkes, Zak McKee, Doug Herr Herb Hartsoe, Lisa Gaston, Tom Richards, and Keith Nichols.


One Way to Kill an ESOP Ownership Culture

Cash Dividends Instead of Cash Contributions Bill McIntyre

ESOP research shows that ESOP companies with an ownership culture outperform ESOP companies without an ownership culture and also outper-

form non-ESOP companies. ESOP companies interested in establishing an ownership culture work long and hard at achieving that goal. Regrettably, some ESOP companies undermine that effort through policies that they may not realize have the effect of killing their own-ership culture, resulting in their failure to outperform other companies or possibly even perform worse than other companies.

Keep in mind a common comment made by ESOP companies: “We have a difficult time getting the newer, younger em-ployees to be excited about our ESOP.” Do the poli-cies I’m about to describe make that ef-fort easier or much more difficult?

For our example, let’s take “POSE Company,” a fictional (POSE is ESOP backward), ma-ture, 100% ESOP-owned company that has already paid off its ESOP notes and now has a fairly steady annual ESOP repurchase obligation equal to the dollar value of 3% of its 300,000 shares outstanding.

In 2010, POSE had another good year with employ-ment up 5% to 100 employees (61 “old employees” who have worked there more than 5 years and 39 “new em-ployees” with 5 years or less of service). The stock price is up 5% to $20.00 per share.

Through 2009, POSE has recycled shares and made cash contributions to the ESOP exactly equal to the amount of that year’s repurchase obligation. The cash contributions are allocated based on W-2 compensation. Accounts of eligible ESOP participants receive an allo-cation of the cash contribution, including newly eligible ESOP participants who have no shares but do have com-pensation. Ex-employees who are still ESOP participants receive none of the cash contribution.

The allocated cash contribution is then used to pay the the ex-employees who are receiving their ESOP benefit distributions so that, ultimately, the remaining

ESOP participants receive additional shares and the ex-employees receive cash.

POSE’s number of employees and stock price have both been growing at 5% per year for the past several years and are predicted to grow at 5% per year for the next sev-eral years. Employee turnover is 10% per year with old employees accounting for only 3% while new employ-ees account for 7% of the 10% total. The company’s stock price at the end of 2009 was $19.05 per share, and the average value of the ESOP account of an employee with 5 years of service was $8,858 in 2009. Of the company’s $171,450 cash contribution to the ESOP, $49,721 was al-located to the ESOP accounts of new employees. POSE’s

ESOP Commu-nications Com-mittee’s annual

survey of ESOP p a r t i c i p a n t s showed that the company had a good ownership culture.

Management was striving for continual im-provement and believed that

the ESOP needed to focus more on rewarding “owner-ship” since ownership is the essence of an ESOP. For 2010, rather than making POSE’s funding of the ESOP repurchase obligation via a cash contribution, manage-ment proposed to the board of directors that the fund-ing occur via a cash dividend of $.60 per share ($180,000 total). Management argued that the dividend would go to those who had shares, and shares represented own-ership, so this was preferable to a cash contribution al-located based on compensation, which had nothing to do with ownership. The board approved the dividend in 2010.

Unfortunately, employees newly eligible to join the ESOP in 2010 have no shares and would receive zero cash from the cash dividend declared. That means they would have no cash to pay to the ex-employees receiv-ing their ESOP benefit distributions, and it means that the new-in-2010 employees would receive no shares of stock, either. Those new-in-2010 ESOP participants would re-ceive nothing in their ESOP account—nothing!

On the other hand, POSE’s old employees are quite happy with the switch

Average ESOP Account Value

2009 2014

ESOP Funding Mechanism previous 5 Years Cash Contribution Cash Dividend

New Employee with 1 Year of Service $1,600 $-0-

New Employee with 5 Years of Service $8,858 $-0-

Old Employee with > 5 Years of Service $87,154 $112,191

Continued on Page 9

How the Have and Have-Not Situation is Created: Five-Year Comparison of Average ESOP Account Values – Cash Contributions vs. Cash Dividends


Xtek has been an ESOP for 25 years. It has been a rocky road to success with a lot of lessons learned along the way. They say you learn more from your

failures than your successes. If that is indeed the case, Xtek is probably the most learned company in the ESOP world. I hope that by sharing things we’ve learned along the way, your path to success will not require so much learning. Despite the rocky path, I am convinced that when an ESOP works the way it’s supposed to, there is no better way to run a company, there is no better gov-ernance function or form, and being the CEO of an ESOP company is the greatest job on Earth.

Xtek is a manufacturer of hard mechanical compo-nents that go mostly into steel rolling mills. We make components for the mechanical drive train for the roll-ing stands, the overhead cranes in the rolling mill, and the lifting equipment used to lift the pieces and move them around. We were formed in 1909 as a small fam-ily-owned company. Our forte was bicycle bearings, and we still have some of the basic processes today that we developed back then. We started in a small plant in Carthage, Ohio, and today, we have five plants around the world, including plants in Cincinnati, Ohio; Ham-mond, Indiana; York, Pennsylvania; and a plant in the Czech Republic.

The founding Brooks family owned the company un-til 1985, when they sold to a buyout firm called Wesray. A year later, Wesray formed the ESOP and sold most of the company to it. We paid off our ESOP loan in 1994, and became 100% ESOP in 2001 when we converted to an S Corp. Today, we’re just under $100 million sales, mostly in the steel industry. Bill McIntyre said earlier that about 70% of ESOP companies come from owner

succession. So, it’s good to put all this in the context of, why, among the choices an owner has, s/he would pick an ESOP as the avenue of ownership succession?

The principal reason that an owner is attracted to an ESOP option is because the owner can monetize his or her assets, with minimal taxes, and maximum post-sale control. No other form of sale comes close to this. Often, an owner will claim that s/he is doing it as a reward to loyal employees, but that is more reflective of the own-er’s emotional state rather than his or her rational rea-sons. For a business owner, who may have spent a life-time building the company, the process of selling can be a significant emotional event. Selling to the employees might be easier than other alternatives an owner might have, but it is still not easy, and because the owner feels s/he is giving something up, s/he expects to get some-thing in return. Firstly, an owner would like the employ-ees of the company to appreciate the sacrifice made in relinquishing the company and allowing the employees to take it on over time. Secondly, the owner would like the employees to start seeing the business and the world the same way s/he does. In short, an owner would like the employees to think and act like an owner. Through an ESOP, you can accomplish that.

So, here you are an owner who has decided to sell to an ESOP. What do you do now? Conventional wisdom says you benchmark best practices, you understand what works best in an ESOP, you learn from different people who’ve done it, you get a committee together to try to make everybody understand what it means to be an owner, what the responsibilities are, what the ben-efits are. Finally, you get everyone excited and pumped up about ownership. Right? This is the process that many companies follow. Unfortunately, this approach is often doomed to fail.

This happens for a lot of reasons, but our experience suggests that the main reason is that people forget to an-swer a few simple questions: When do employees start thinking and acting like owners? Under what condi-tions does that happen? And why does that transition take place? While I am sure there are many possible answers to these questions, we have boiled it down to a couple of key criteria that we’ve observed over the course of time with our company.

First, an employee has to have a meaningful finan-cial stake in the company. If the financial stake isn’t there, they’re thinking like employees 99.9% of the time, and they’ll act like employees and not like owners. If you think about it, when an owner sells his company to an ESOP, the trust owns the shares in the company, but those shares are normally encumbered by the ESOP loan and they are not

Xtek: Our Rocky Road to SuccessKyle Seymour, CEO, Xtek, Inc.

Keynote Address2010 Ohio Employee Ownership Annual Conference

Continued on Page 8


allocated to participants. What really matters to a participant is the balance of shares in an employee’s account. On Day 1, it’s zero, and it takes time to build up a balance. There is little a company can do about this phenomenon except experi-ence over time the building of shares for an employee.

Second, an employee has to have meaningful control, input, or influence over the strategic or operating de-cisions of the company. Remember that one of the key reasons why an owner chooses the ESOP model is so that s/he can maintain maximum post-sale control. It is not natural for an owner to solicit employee input when making a decision, nor to relinquish control to employ-ees, so it takes a conscious effort to do so.

While true ownership requires that both of the crite-ria be met, it is possible to achieve good results by really focusing on the second criterion, and most companies that succeed early in the process of ownership really work hard on that one.

Building a meaningful financial stake through an ESOP takes time, and this implies a life cycle to the process that I call the ESOP Maturity Continuum. The first phase of this continuum goes from time zero to the point at which the stock actually allocated to employ-ee accounts reaches a majority of the ownership of the company. That’s the startup phase. The second phase, which I call the wealth transfer phase, starts from there and it goes to the point where the stock is 100% owned by the employees and the shares are fully allocated. The final phase, which I refer to as the mature ESOP phase, is everything beyond. I just want to briefly talk about those phases.

In the startup phase, the employees have little stock in their accounts, high leverage necessitates tight con-trol, and governance is new to employees. They don’t’ know much about it yet. It’s new, it’s mysterious, and there’s not a lot really changed. Generally employee ex-pectations in this phase are very low. That is unless you overtly act to try to elevate them, which is what the vast majority of companies seem to do. We certainly did it.

We had a big party the day we launched our ESOP. We put out a brochure and had training sessions about the joys and responsibilities of ownership and generally celebrated the occasion with great fanfare. We elevated expectations very high, and then, reality set in. In fact, right after the party, we had an operating crisis. One customer went on strike and another went bankrupt, and all of a sudden, everything’s a mess. We handled the crisis in the same way we always had and did a gen-erally poor job of communicating what we were doing. The expectations of ownership that got set so high with the kickoff suddenly came crashing back to reality.

The only thing we did well in an ESOP sense during this phase was to get a good administrative structure in place. If you do nothing else in the startup phase, that is one of two key things you should focus on, make sure you get a good plan document and good administration in place. Then, secondly, communicate more or differ-ently than you did before. If you hadn’t been putting financials on the board, put them up. If you used to

put them up, talk about them. Have something that is visibly different to people than what they’re used to, so that through behavior, you’re signaling that something has changed. Don’t over-hype ownership early on be-cause it will lead to expectations that can’t be met. At Xtek we post financials and operational metrics every month, and I do all-employee meetings every quarter. Consistent, effective communications work wonders. Whatever you do now, do something different after you become an ESOP. Let people see visible change.

The second phase is what I call the wealth transfer phase. This is the most complicated phase and the easi-est to screw up. The employees now have a majority of the company stock in their accounts. Yet, there are other owners. There are conflicts. There’s complexity. There are secondary stock sales. There are things hap-pening (such as equity based incentive plans) that po-tentially dilute the holdings of the employees. If you don’t do things properly, the paranoia will build among the ESOP participants at a lightning pace.

At Xtek, basically, we did not recognize our entry into this phase and did not change in any way to adapt to it. We had an independent Board but no-pass through

voting. We stopped allocating stock to employees af-ter the ESOP loan was paid off, so new employees had no way to participate in the ESOP. At the same time, we were using stock options for management incentive plans. Finally, we had turnover in our trustee and valu-ation firms even as we were doing secondary stock sales by management to the ESOP. All of these things in to-tal gave the ESOP participants a very sour taste for the ownership experience.

A couple lessons learned from this: In this phase, you have to recognize that things have changed. As that meaningful stake builds, people are going to look at things differently, scrutinize more, be more questioning. Here, the most critical thing is to get an independent governance set in place, independent board, indepen-dent trustee, independent valuation firm, independent audit firm. And try to stay with that so it doesn’t appear like you’re self-serving in the process. Secondly, this is a good time to start giving people a voice. Pass-through voting is not that scary. It may seem that way, but it’s not. It’s a good thing to do in this phase, so people start to have a say and start to have a vote. We put a lot of committees together to do things like select the 401(k) provider, for example. We did that with an employee

“They say you learn more from your failures than your successes. If that is indeed the case, Xtek is prob-ably the most learned company in the ESOP world.”

Continued from Page 7


committee to start to get that input and influence into the governance process.

The last phase is where it all comes together and makes it all worthwhile. In fact, at Xtek, everything I’ve said you should do in the earlier phases, we didn’t do until we were already into the mature ESOP phase, but doing them allowed us to catch up very quickly and start to make the ESOP really effective. In this phase, most of the original owners are cashed out. The sharehold-ers’ interests are highly aligned with the employees, and that’s a neat thing that doesn’t really exist anywhere else. Employee owners make the most patient and long-thinking shareholders you can ever have. They don’t obsess over quarterly earnings and they truly love re-investments in the business. They want to see it, even when they understand that taking on debt tends to tem-per the stock prices. I have always been amazed by how mature and understanding people were about even big strategic investments. You just have to explain it clearly and help them to see the picture as you see it. It’s always been amazing to me that it worked out that way, but it has. Even after all the stupid things we did in the prior years, it’s still the case.

This is the phase where you start to really enjoy own-ership, where it really starts to make sense, where people start to feel it because employees do have a meaningful financial stake and a say in governance. This is where it starts and now is the time to really hype ownership and to expect people to think and act like owners.

To wrap it up, be cognizant of where you are on the maturity continuum. Set goals and try to align your practices to the things that make sense given where you are. Always be mindful of what makes people tick and what causes their feeling of ownership to be there or to be absent, and be realistic about it, particularly in the early stages. Lastly, do not try to change your culture to an ownership culture. The more you try to change it, the more resistant it will be. Instead focus on changing your behavior as a leader, and demonstrate the value of ownership through your own actions. Show employees through your actions that something has changed for the better because of their new position as owners. If you do that, the culture will evolve into an ownership culture. It may take some time, but it will evolve there and once it does, like I said at the beginning, there is nothing better than running an ESOP company. Thank you! OAW

to the dividend in 2010. They had shares, so the $180,000 cash dividend was al-located to their ESOP accounts, and they used that cash to purchase additional shares from the ex-employees re-ceiving their ESOP benefit distribution.

Also, just like the old employees, ex-employees who still were ESOP participants and had shares of stock in their ESOP accounts, would receive $.60 per share divi-dend for every share in their account.

So, ex-employees benefit nicely but new employees receive nothing. Hmm…

Yet, management was so pleased with the old em-ployees’ reactions that they decided that the cash divi-dend as a funding mechanism for the ESOP would be a permanent change.

Thus, the 2010 scenario would repeat itself in 2011: newly eligible ESOP participants in 2011 as well as those who became eligible in 2010 would receive nothing in their individual ESOP accounts in 2011.

This scenario would also be repeated in 2012, 2013 and 2014. New ESOP participants would receive noth-ing in their ESOP accounts. By the end of 2014, with growth and turnover, POSE would have a total of 122 employees but only 65 would be old employees and 57 would be new employees with 5 years or less of service. And those 57 new employees would have nothing in their ESOP accounts.

POSE has created a classic “have” and “have-not” sit-uation with its ESOP. 53% of its ESOP participants own 100% of the stock and 47% of its ESOP participants own zero.

Imagine the difficulty for POSE’s ESOP Communication Committee members trying to spread the message that the

“ESOP is good” to new employees when they’ve been re-ceiving zero benefits for several years. The likely response of new employees would be, “Sure, the ESOP is good for old employees, but it’s worthless for new employees.”

In all likelihood, in just a few years, POSE’s owner-ship culture would be torn apart by using cash divi-dends instead of cash contributions to fund the ESOP.

Furthermore, the disillusionment of new employees with the ESOP would likely lead to a reduction in per-formance, growth, and profitability and to a lower ESOP stock price.

SOLUTION: Fund the ESOP with cash contributions. If POSE really wants to reward ownership, funding the ESOP 50% via cash contributions and 50% via cash divi-dends would be a good compromise as both new and old employees would be rewarded for their ESOP par-ticipation, and new employees would have an incentive to become old employees.

CAUTION: If POSE was to have the company pay the ex-employees their ESOP benefit distributions by redeeming and retiring their ESOP stock and not re-contribute those shares to the ESOP (stock redemption instead of recycling), the results would be similar to those described above. Stock redemption can possibly be another killer of ownership culture.

LessonNever forget that company performance depends

on BOTH ownership of shares and practices of man-agement that promote participation and involvement. A company striving to maximize its performance with a great ownership culture is not well-served by ESOP policies that obstruct or destroy those efforts. OAW

Continued from Page 6


John Logue was a lifetime champion of the democratic workplace. He touched many lives, including my own. John made a difference, and he inspired others to make

a difference. When John passed, the Ohio Employee Own-ership Center put up on the website a tribute describing his life. I was struck when I looked at what was said there, but most specifically, there is a line that says, “He was not born a wealthy man nor did he die as one. Contented instead with the modest security of a professor’s life, he sought to help oth-ers create a similar security for themselves.” To me, that is in-spirational.

Employee ownership, worker empowerment and democ-racy in the workplace are all issues dear to my heart. At one time, I did a little work as an attorney representing workers throughout Northeast Ohio. So, I also have that kind of per-spective when I go out and fight for policies that will work with and for all of us. And as John’s work illustrates, em-ployee ownership gives workers a way forward when their workplaces are closing—we’ve seen that. And employee ownership allows for family businesses to continue operating after the last family member retires. But best of all, employ-ee-owned businesses are successful businesses. Studies have shown, the more avenues for participation for employees in a company, the better the company’s performance. In majority employee-owned companies, employees receive wages that are 5 to 12% higher than the median hourly wage in compa-rable companies. They receive higher benefits, including a better retirement plan. One study showed that the value of retirement plans is 150% higher in ESOP companies than non-ESOP companies. Employee-owned companies also benefit the local community. So, it goes beyond just those who are di-rectly involved. An ESOP is less likely to lay off people when the economy slumps and less likely to ship jobs overseas. That has been a great concern to me and to so many families throughout Northeast Ohio and beyond who have suffered because of the loss of jobs shipped overseas.

One study found that in 2009, one of the roughest years for the economy since the 1930s, 66% of ESOPs grew or stayed the same. That’s pretty impressive! Higher wages, better ben-efits, less layoffs, more jobs in this country and the ability to weather economic storms, all sounds pretty good to me. Cen-ters like the Ohio Employee Ownership Center have a posi-tive impact on the number of employee-owned companies in the area and ensuring that those employee-owned companies utilize best practices.

Ohio is, of course, one of three states to have a state-sup-ported employee ownership program. It is also the oldest to continually operate such a center. The thinking that employee ownership represents is inspiring to me and is emblematic of the work that I do in Congress. For example, I also face this kind of thinking that we can either do this or we can do that,

that we can either have enfranchised workers or we can have a successful business, but not both. I have to fight against this in Congress in much the same way that you fight against that mentality as you create solutions that work for employees, as well.

In March of 2009, when I introduced the CARS Act, more affectionately known as “Cash for Clunkers”—yeah, who knew [laughter]—I did it to shore up jobs in the auto and re-lated industries and to improve the environment by provid-ing incentives for consumers to purchase more fuel efficient vehicles, giving them savings well into the future. But some people said, “There are too many goals to the legislation: To shore up thousands of jobs and restart idle factories, to help consumers purchase more fuel efficient vehicles and to im-prove our environment. That’s just too much.” But we accom-plished these goals.

Through the CARS program, nearly 60,000 people were put back to work. We saw an environmental gain of 60% in the cars that were purchased. We increased fuel economy in a way that will save consumers an estimated $700 to $1,000 a year.

As I said, I am sure that you face that kind of fight all the time—the voices out there that say you can’t help workers and help the economy, that you can’t allow employees to have a voice in the running of the business and be a successful business—but your very presence here today illustrates that you have rejected the false choice of either/or thinking. Find-ing innovative ways to solve our nation’s problems is what’s going to take us into the 21st century. One example we’ve al-ready heard of here today is the Evergreen Cooperatives in Cleveland.

The Evergreen Cooperatives rejected the either-or men-tality. Evergreen realized that not only do people need jobs, but also they need the ability to build personal wealth and

“Can We Have Enfranchised Workersand a Successful Business?”

Betty Sutton, Ohio 13th District, U.S. House of Representatives Keynote Address

2010 Ohio Employee Ownership Annual Conference


the ability to contribute to the community. Evergreen works from the philosophy that jobs alone do not eradicate poverty, that in order to succeed, people also need a say in how their workplace operates. And when workers are the owners, they not only have a say in how their workplace works, but they have a stake in ensuring that the business is profitable. They know that when the company does well, they do well, and when the company doesn’t do well, they don’t do well, and that can be an incredibly powerful motivator. Unlike more conventional work environments, where the CEO is the top brass and the shareholders are the only people who see the profits, at Evergreen and at so many other ESOPs and coops, the workers, who are the owners, see the profits as well. Ever-green has fostered the growth of three worker-owned coops in the Cleveland area, including a commercial laundry that serves the needs of a number of facilities in the area. These are for-profit companies providing needed services, with the workers at the helm.

Evergreen has also started Ohio Cooperative Solar to pro-vide weatherization and solar panels to businesses across the state. Ohio has adopted an alternative energy portfolio stan-dard mandating that by 2025, all electricity sold in the state will come from alternative energy resources. Clearly, the solar thermal market will be there as this is accomplished. Finally, Evergreen is embarking on a new worker-owned food pro-duction greenhouse in Northeast Ohio. That greenhouse will employ more than 40 people, while allowing them to earn eq-uity in the company—creating jobs, helping the local econo-mies and improving our environment. I really can’t think of a more winning business.

ESOPs and coops have continued to expand across the country. Recently, the United Steelworkers partnered with Mondragon, the very successful Spanish cooperative. Busi-nesses that Mondragon has started or taken over have a phe-nomenal 97% success rate. Together, USW and Mondragon

will work to expand worker cooperatives in the manufactur-ing sector in this country. They will adapt collective bargain-ing principles to the worker coop model, coupled with suc-cessful business practices. I just hope that their first venture will be in Northeast Ohio, preferably the 13th Congressional District!

Part of ensuring that ESOPs are successful and are able to grow means ensuring they have access to capital. Employee-owned businesses are often small, and need working capital.

So, recently, I cosponsored legislation to streamline the Small Business Administration lending process. HR4598, the Express Loans Improvement Act of 2010, allows banks to more quickly process SBA-guaranteed loans and get money into the hands of small businesses faster. It will also increase the loan value amount from $350,000 to $1 million, which more accurately reflects the needs of small business, and it increases the guarantees for SBA lenders. Congress needs to take these steps, along with many others, to ensure that small businesses and ESOPs have the access to the capital they need.

As a member of Congress, I want you to know that I look forward to working with you to support employee owner-ship and to support two pieces of legislation to encourage and expand employee ownership that Senator Bernie Sanders of Vermont and Senator Sherrod Brown of Ohio have intro-duced in the Senate. Neither of these two bills has been intro-duced in the House yet, but that’s about to change because I will soon introduce companion legislation.

The work that you do to ensure that employee ownership is successful, you should know, makes a tremendous differ-ence. It’s an inspiration to me, and it’s a shining example of what we can do when people join in common cause.

Thank you again for inviting me to be with you this morn-ing. I look forward to all of the successes that this room will produce in the weeks and months ahead and look forward to working with you to help. OAW

IndividualJim AndersonKate CullumDavid EllermanKaren GibsonJulie GrahamTim LogueSteve NewmanKarstin OlofssonCarla RautenbergWillard RodgersRubicon ValuationAbby ScherJohn ShockleyJay SimecekFred SimonRalph Stawicki, Sr.Rick VermillionRichard WeigelHoyt WheelerElliot Zashin

BronzeAnonymousKaren ArdJoyce Baugh

Steve ClemCommon WealthComstock AdvisorsCrowe Horwath LLPSteven DubbRobert FishmanMichael FriedmanRobert GinsburgTom HensleyJohn HoffmireJohn HoornbeekDon JamisonKelso InstituteBob KraftSherman KreinerRiley LochridgeLarry MackJoseph MarxMathews ESOP CompanyKenneth MayNational Center for Employee OwnershipDeborah OlsonSouth Mountain CompanyFloyd TroutenHoyt WheelerKaren Youngstrom

SilverAnonymousBuckeye CorrugatedRaymond Carey, Jr.George CheneyColumbia Chemical CorpCrowe Horvath LLP Carl DrauckerMary Giganti

PlatinumGreat Lakes Brewing CoDave GustafsonDave HeidenreichBill Melton

Friends of the Center - Honor Roll

Thank You for Your Support!


Nearly 400 people registered for the 24th Annual Ohio Employee Ownership Conference April 30th at the Hilton in Fairlawn, Ohio, an impressive turn-

out given the current economic uncertainty. After welcom-ing remarks from Leah Anglin-Walsh, Ohio Department of Development, OEOC Program Director Bill McIntyre paid tribute to OEOC founder, visionary and longtime Director John Logue, who passed away unexpectedly in December 2009. This year’s conference featured three keynote speak-ers: U.S Representative Betty Sutton, Ohio’s 13th District; Jack Dover, Senior Advisor to U.S. Senator Sherrod Brown; and Kyle Seymour, CEO of Xtek, Inc. You can read their edited remarks elsewhere in this newsletter or view their speeches on the OEOC’s website at http://oeockent.org/.

Following the general session, the morning round of concurrent workshops gave folks a choice of seven panels featuring employee owners as well as professional service providers. The panel on the ABCs of ESOPs for Employee Owners featured Joel Davis, Principal Financial Group; Carl Grassi, McDonald Hopkins; and Scott Miller, En-terprise Services. The panel was moderated by Gregg Cramer, Greater Akron Chamber. Folks attending the panel on Best Practices in Governance heard Bill Beattie of Bardons & Oliver, Anita Stanners of Kraft Fluid Sys-tems, Kyle Seymour of Xtek, and Jack Veale of PTCFO share advice on good governance in an employee-owned firm. Ed Schmitt, Riesbeck Food Markets, served as panel moderator.

The topic of Creating Winning Teams and Committees was ably handled by Herb Hartsoe, EBO Group; Debi Kozak, Joseph Industries; Matt Bush and Wendy Gnap, The Ruhlin Company; and Carl Trisdale, Thomson-

Shore. The panel was moderated by Floyd Griffin, Patio Enclosures. The technical panel titled The Great Reces-sion’s Impact on ESOP Valuation, Financing & Restruc-turing Existing Loans was moderated by Merri Ash, First Bankers Trust Services, and featured Kim Abello, JP Morgan Chase; Mary Josephs, Evergreen Private Capital Advisors; and Rick Schlueter, ComStock Valuation Ad-visors. The panel of Brian Hector, Morgan, Lewis & Bock-ius; Rosanne Aumiller, Barnes Wendling, CPAs; and Robert Massengill, SES Advisors, discussed Minority vs. Majority ESOPs: Issues and Opportunities. Serving as moderator was Alex Freytag, Ownership Thinking. The theme panel on Visions for the Next Decade of Employee Ownership featured John Hoffmire, Center for Business and Poverty, and Tony Mathews, Beyster Institute, along with Roy Messing, OEOC. Moderating the panel was Doug Corwon, Federal Mediation and Conciliation Ser-vice. What do you do when your company is too small for an ESOP? Alicia Cordell, Casa Nueva Restaurant & Cantina, and Mark Stewart, Shumaker, Loop & Kend-rick, discussed that issue on the panel titled Selling your Company to your Employees: The Worker-Owned Coop-erative. The moderator was Rod Kelsay, Mid-American Cooperative Center.

Lunch featured a presentation by Bruce Herman, New York State Department of Labor, on Extending the Ohio Model into New York. Also at lunch, Rable Machine re-ceived an award for “Growth and Success During the Storm,” while EBO Group received the very first “John Logue Employee Ownership Excellence Award.”

The rest of the day featured discussions ranging from ESOP technical issues to issues of ownership culture to

worker coopera-tives. Jay Sim-

The 24th Annual Ohio Employee Ownership Conference

Going Forward with a Vision


ecek and Olga Klepikova, Ohio Employee Ownership Center, led a session titled Better Problem Solving Will Improve Your Bottom Line. The panel on Ideas & Strate-gies for Communication and Education featured Martha Kimura, ACRT; Mary Bing, PRC; and Steve Dendinger, Janotta & Herner. The panel was moderated by Marge Mellinger, Delta Systems. Making a Difference/Lessons Learned in the Downturn saw leaders from three compa-nies discussing the challenges of the recent downturn in a wide range of areas from Board roles to managing the triple bottom line. The panel included Jeff Conrad, Will-Burt Company; Bob Martin, Jr., Marie Schenkel and Chris Aguilar, RJ Martin; and Matt Paul and Jeana Wy-cuff, Casa Nueva Restaurant & Cantina. The discussion was moderated by John Habanek, The Great Lakes Con-struction Company.

An ESOP Legal & Fiduciary Update was moderated by Michael Moldvay of Bober, Markey, Fedorovich & Company, and featured panelists Tim Jochim of Kegler, Brown, Hill & Ritter; Ben Wells of Dinsmore & Shohl; and Vaughn Gordy, GreatBanc Trust Company. Folks at-tending the panel on The Evergreen Cooperatives: Starting New Employee-Owned Cooperatives in Cleveland got an inside look from Mary Ann Stropkay, ShoreBank; Steve Kiel, Ohio Cooperative Solar; and Ted Howard, Democ-racy Collaborative. The discussion was moderated by Jim Anderson, OEOC and CEO of Evergreen Cooperative Laundry. The panel on Selling Your Company to Your Em-ployees: Employee Stock Ownership Plans (ESOPs) was designed to help employers learn whether ESOPs can be a tool in helping them exit the business. Representatives on the panel included Mary Giganti, Waldheger Coyne; Da-vin Gustafson, Apple Growth Partners; and Dave Mof-fat, PRC. The panel was moderated by Sue McKitrick, Ohio Department of Development. A technical panel on ESOP Benefit Distribution Rules featured Van Olson, Van Olson Law Firm; Pete Shuler, Crowe Horwath; and Flor-ence Zabarsky, Zabarsky & Associates, and was moder-ated by Cecilia Loftus, ESOP Economics.

Following an afternoon coffee break once again spon-sored by SES Advisors, the last round of concurrent pan-

els began. The E m p l o y e e

Owners Forum: Making Employee Ownership Real pro-vided participants the opportunity to talk about the re-sponsibilities and benefits of employee ownership. The discussion was facilitated by Karen Thomas, OEOC. Folks interested in Age 55 Diversification heard from Deborah Groban Olson, Law Offices of Deborah Groban Olson; Wendy Lankes, RK Schaaf Associates; and Tina Fisher, SES Advisors. The discussion was moderated by Steve Wilt, CAPTRUST Financial Advisors. A panel on Plan-ning for Growth, Change & Success featured the CEOs of two of Ohio’s most successful ESOP companies, Jim Ruh-lin, The Ruhlin Company, and Jeff Evans, The Will-Burt Company, along with attorney Robert Brown of Boylan, Brown, Code, Vigdor & Wilson. The panel was moderat-ed by Robert Taylor, Falcon Industries. A panel on ESOP Issues in a Down Economy was moderated by Tom Potts, Fiduciary Trust Services, and featured Jim Steiker, SES Advisors; Barbara Clough, Blue Ridge ESOP Associates; and Richard Tanner, Ownership Advisors. The co-op track at the conference was completed with a panel called The Mondragon Cooperatives: Lessons for Ohio and the USW Partnership. It featured Mikel Lezamiz of the Mon-dragon Cooperative Corporation in Spain along with Rob Witherell of the United Steelworkers Union. The panel was moderated by Steve Clem, OEOC.

Following the formal program, at the closing reception, the discussion continued in a relaxed atmosphere. At the end of the day, our position as the best one-day ESOP con-ference in the country was maintained! We thank every-one who helped make the conference the largest employee ownership event in the region, and we look forward to seeing even more folks next year as we celebrate the 25th Annual Ohio Employee Ownership Conference on Friday, April 29, 2011. Mark your calendar. OAW

Highlights from the conference: (left) Rob Witherall, United Steel-workers (seated) and Mikel Lezamiz, the Mondragon Cooperatives, talk about the planned partnership between their two organizations; (center) Jeff Evans of The Will-Burt Co., Bob Taylor of Falcon In-dustries (standing), Jim Ruhlin of The Ruhlin Company, and rob-ert Brown of Brown Code Vigdor & Wilson, discuss planning for growth and success; (below) Jack Dover, Senior Advisor to Senator Sherrod Brown, talks at the morning general session.


I was at the International Labor Office in Switzerland earlier this week because they were interested in hearing about New York’s experience involving the

shared work program. It’s been extremely useful for our state, and I think it’s also relevant to a lot of businesses here in Ohio.

In New York, shared work or work share—the more technical term is short-term compensation—allows em-ployers to reduce workers’ hours., Say people go from 100% time to 80%, then they go on 20% unemployment insurance. That helps mitigate the compensation loss for the employees. From the employer’s perspective, it is a good situation because employers shed workers reluc-tantly in times of economic stress. They feel they have to do so to reduce costs, but then there’s considerable cost associated with hiring and training new workers when things get better.

The shared work program in New York had been around for a number of years, but it was underutilized. We marketed it aggressively, and as a result, over 2,000 New York businesses and over 50,000 New Yorkers have participated in the program. It saved thousands of jobs.

Shared work is a program that other states can imple-ment. There are some federal guidelines, but like many things in America, no national system. Presently 17 states have variations of the shared work program. I would encourage Ohio and other states to look at it. In Pennsylvania they are moving to cre-ate a shared work program. It’s a viable tool. In countries that have it as standard operating procedure—Germany being the most notable—it is credited with reducing the unemployment rate by a full percent during the recession. The recession in Germany was not as deep as it was in the United States, and they’re coming out of it much quicker. The Germans credit much of that to maintaining the workforce through shared work.

I left Geneva and the ILO workshop early, be-cause I had a commitment to the Ohio Center for Employee Ownership, to all of you and to John Logue, to be with you today.

Last year, I asked John to work with us in New York State so we could recreate a capac-ity and be of greater assistance to ESOPs in our state. Fifteen years ago New York had the premier center for employee ownership in the

country. Housed in our Economic Development Depart-ment, it was funded primarily by a contract through the Department of Labor. That went away when the gover-nor changed, because the Employee Ownership Center was considered the last guy’s program and not the new guy’s program.

When we were beginning to do the work to resurrect the New York center, John reminded me that it was a bit of ‘back to the future,’ because the New York center had actually helped in the creation of the Ohio center, which has flourished while the New York center went away. We have been reintroducing the ESOP concept and that ca-pacity in our state.

There are over 300 ESOPs in New York State. With John, Bill and others from the OEOC, we connected with their experiences in a series of workshops and seminars in almost every major city and some of the minor cities. We involved the local ESOPs. They were often well known businesses in the community, although it was sometimes less well known that they were employee owned. They told their powerful stories about commitment to the com-munity, creating and spreading wealth. It is clear that many jobs and businesses would not be in that commu-nity, would probably not even be in New York State, if they weren’t ESOPs.

Mitigating the Great Recession

with Employee OwnershipBruce Herman, Deputy Commissioner for Workforce Development, New York Department of Labor

Luncheon Keynote Address2010 Ohio Employee Ownership Annual Conference


We’re also trying to create a layoff aversion early-warn-ing system modeled after what Pennsylvania has done. We launched a program we call ASSET, which means As-sist, Stabilize, Secure, Empower and Turnaround, in New York City and Long Island where the greatest concentra-tion of population and business activity is located. We’re trying to get ahead of distressed situations in businesses through an early-warning dashboard that taps into new databases and relationships with local economic devel-opment, financial issues and people who are often aware of situations of distress long before a WARN notice is is-sued.

As you know, Federal WARN legislation says firms are required to provide notice when they are about to un-dergo significant downsizing or layoffs. It’s a very impor-tant tool, and we could use it more effectively if we get more notice.

Our experience has been that once we get the WARN notice, it’s often too late to salvage the business and save those jobs. New York State has pushed the WARN legis-lation further, and we require 90 days notice rather than 60 days for firms that have 50 employees or more rather than 100 employees or more. Senator Sherrod Brown has introduced similar legislation in Congress. We do our best to respond to the dislocations by providing services

for dislocated workers, but it’s frustrating to get involved in situations where that’s the only thing you can do. With six months or even a year prior notice, more could be done to stabilize the business.

The ESOP option is a very important component in the tool kit. It’s very difficult to apply the ESOP program effectively in situations of severe distress when the busi-ness is really on the threshold of collapse. However, by creating a layoff aversion early-warning system and hav-ing ESOPs as one option, we think we are moving in the right direction and we’re looking to get more support from the federal government to do that.

We’re returning to our history because we know from experience that tapping into the entrepreneurial talent of working people is a great opportunity and has great benefits in our communities and throughout our country.

I want you to understand my commitment to the work that you’re engaged in and New York State’s growing commitment to that work. I don’t know if we’ll be successful because success is never guaranteed, but I do know that we must continue to try. Together, we will maximize opportunities and the possibilities for success. We should do no less and take pride in knowing that we have done all we could. Thank you. OAW

Unfortunately, with the country enduring the Great Recession, some ESOP companies have not survived, and their ESOPs have been termi-

nated. Also, some ESOP companies have been sold and the ESOP has been terminated as part of the sale. We’ve received several calls from ex-employees of those compa-nies wondering when they’ll receive their ESOP benefits.

There is no specific deadline as to when a final ESOP distribution must be made. Typically, an ESOP trustee will not allow a distribution until the IRS has ruled that the ESOP has been officially terminated. To do otherwise would put the ESOP trustee at risk. Sometimes, the IRS process takes a couple of years to make a determination with respect to a specific ESOP.

There are several steps that an ESOP must follow be-fore it can make final distributions to ESOP participants. An IRS Form 5310 “Application for Determination for Terminating Plan” must be filed. The ESOP’s final tax return must be filed. In the case of a sale, there are often events subsequent to the transaction date that affect the sale price and must be taken into account; for example, a reduction in sale price for the discovery of listed as-sets that are missing or inventory that is obsolete but still

on the books. Final allocation calculations must be de-termined. The treatment of unallocated shares must be determined.

Of course, if an ESOP company declares bankruptcy, it’s highly likely that the ESOP stock is worthless. If a company is forced to liquidate, it is required to pay off its creditors before it can pay its owners. Typically, there’s not enough money to pay off all the creditors, which means there’s nothing left for the owners, the ESOP par-ticipants.

However, even if the ESOP stock is worthless in the case of bankruptcy, many ESOPs have cash in ESOP par-ticipants’ individual accounts, and the participants are entitled to receive that cash. If the company is bankrupt, the cash in the ESOP must be used to pay the fees for the ESOP attorney, trustee and administrator in terminating the ESOP, so there sometimes is no cash left over for the ESOP participants in bankrupt ESOP companies.

The message: If an ESOP is terminated because the company was sold or entered bankruptcy, employees should not expect a quick payout of their ESOP benefits; and, in the case of bankruptcy, there may not be any ESOP benefits. OAW

My ESOP Has Terminated

When Do I Get My Money?Bill McIntyre


Two ESOPs Join Forces

Employee-owned CTL Engineering, Inc., headquartered in Columbus,

announced the acquisition of a Cincinnati employee-owned company, Industrial Communications and Sound. The presidents of both companies agree that the employee owners of CTL and ICS will be the greatest beneficiaries with greater opportunities for career growth into different fields and increased stock value over time due to increased cash flow from the combined entity.

The merger creates synergy for both companies to provide more services to their clients. CTL Engineering is a full-service consulting engineering, testing, inspection and analytical services company, while ICS specializes in audio-visual and security systems solutions and professional customer support.

“By providing a variety of services under one roof, clients will spend less time looking for alternative vendors and establishing contracts,” said C.K. Satyapriya, CTL’s president. Allen Volz, the president of ICS, agreed, “Our clients will benefit from the multiple locations offered by CTL.”

PRC Has Unique Culture and ESOP Allocation Process

PRC’s unique culture was shaped by the entrepreneurial spirit of their

company’s founders and their respect for others. Because employees were concerned that their special culture would change as the company grew, company president Dave Moffatt and Communication Committee members led employees in a process to define the essence of their way of working together and codify it into a culture statement.

Each employee wrote notes on “six things we value about our company” and ”six things we’d like to change.” Responses were grouped and translated into value statements, symbolized by a culture tree, and the tree was printed on a large poster for all to see at the company picnic. Throughout the day of the picnic employees wrote what was important to them on leaves of the tree. The comments have been shared with employees nationwide and are displayed with the poster in their lobby.

At their “Lunches with Lee” educational program, small groups of employees met with PRC CFO,

Lee Miller, for lunch and financial information sharing. The company provided each person with a lunch and a glossary of financial terms.

“This year we are organizing monthly birthday celebrations for small groups of employees with President Dave Moffatt,” explained committee chair Mary Bing. “Employees are encouraged to ask questions and share ideas for improving PRC’s products or services, increasing efficiency or productivity and working together more effectively. This is their chance to tell the president what they will do when they become president…and eat cake!”

PRC, headquartered in Wooster, became 100% employee-owned in 2008. The company’s founders established their leveraged ESOP in 2003 as a succession strategy. As the loan is paid down, ESOP shares are allocated by a point system based on years of service and compensation: 1 point for each $100 of compensation and 10 points for each year of service. The firm, which now has about 140 employees, is a worldwide leader in augmentation communication technology that helps people with severe disabilities gain independence.

YSI Has Record Performance

Despite many challenges, YSI had a record year in 2009, exceeding $90

million in sales, a 15% increase over 2008. Sales growth along with solid increases in operating income and an increase in positive cash flow resulted in a 13% increase in their ESOP stock value.

This remarkable success was achieved by delivering new products, acquiring a new subsidiary, expanding global distribution, and strengthening relationships among internal teams and customers.

YSI acquired Design Analysis Associates (DAA), based in Logan, Utah, in June 2009, adding a complementary line of products in the outdoor monitoring market. New product successes included the RiverSurveyor™, GOES radio, new anti-fouling options, upgraded Professional Series handheld options and improved optical sensor technology. The company also expanded global distribution in China, added subsidiaries in India and Brazil, and expanded staff in Australia.

YSI, headquartered in Yellow Springs, has over 300 employees worldwide engaged in water resource instrumentation and environmental monitoring quality systems. The company is 30% employee owned though an ESOP established in 1983. YSI was the 2009 Company of the Year in the Ohio/Kentucky Chapter of The ESOP Association.

ACRT Communication Team Creates 25th Anniversary Game

Employee involvement contributed substantially to ACRT’s success

as a utility vegetation management service. So how did the company celebrate its 25th anniversary? The ESOP communications committee developed a game that promotes more and broader involvement in continuous improvement of the firm, and more than half of the employee-owners have already played it!

ACRT opened its doors 25 years ago with fewer than 50 employees. Headquartered in Akron, the firm now employs more than 400 professionals throughout the United States and is a recognized leader in in its field.

It established its ESOP in 1999 and became 100% employee-owned in 2003, practicing equal distribution to everyone and fully vesting employees after five years.

“We are looking to the future, and are dedicated to making the next 25 years as great as the first,” said Mike Weidner, ACRT president and CEO. “As an ESOP company, everyone is motivated to always put their best foot forward to ensure quality service for the future growth of our company.”

“Employee involvement is the cornerstone of our success – all of our owners have a voice,” Weidner said. “This game is just another way we are facilitating and encouraging our team to develop improvement initiatives that will carry us into the future.”

Operations Manager, Pat Paternostro, who began his career with ACRT 18 years ago as a field forester, recalled the early days. “ As an ESOP, ACRT gives a voice to employees, so anyone can make a difference and help the company succeed.” For more information on ACRT, visit www.acrtinc.com. OAW

Network News


When contemplating a sale of their business, many business owners automatically assume it will be to family members or to an outside

third party buyer. Business owners have a lot of pride in the businesses

they have built, and they often feel that one of the great-est gifts they can bestow on their children is to transfer the business to them. This is what has been called the “someday this will all be yours” syndrome. But the re-ality is that most children do not want to take over the family business. They may have separate careers of their own that they are loathe to give up, or they may not have the previous generation’s skills and abilities to keep the business profitable and successful.

Confronting the reality that the children don’t want to take over can be a surprise for many business owners. Consequently, a business owner might look to an out-side buyer as the next logical choice. This action may be more likely if they hear an acquaintance bragging about the high selling price they realized when they sold their own business last year, without any mention of debts, outstanding fines, and fees they may have had to pay out of the proceeds. Owners may believe that they have mul-tiple suitors ready and willing to buy the business, but they can find the deals evaporating when “minor” details like financing are discussed. Or they may think that sell-ing to an outside buyer is the least stressful form of busi-ness transfer, when in actuality they may be unprepared for the amount of legal and financial due diligence, and general business polishing, required to get their business ready to sell.

Business owners can suffer from what is termed “seller’s remorse,” and be unprepared for changes to the business (loss of jobs, closing of the business, changing the name, etc.). This is especially so when new owners make radical changes to the business the seller has spent a lifetime building, a business that provides jobs for fam-ily, friends and neighbors, and finances valued benefits for the community. A lifetime of goodwill and reputation can evaporate very quickly. Lastly, some business own-ers may be looking to cash out some equity, but may not be ready to retire from the business. Selling to an outside buyer may not give them that option.

The positive news is that there are additional options for the business owner in selling to the employees. These fall into two categories: sales to some employees (man-agement/key person buyouts) and sales to most or all employees through Employee Stock Ownership Plans

(ESOPS) and worker owned cooperatives. These strate-gies share some common benefits:

1) Selling to the employees doesn’t necessarily mean selling for less. In fact, the net proceeds from selling to the employees may be higher than selling to an outsider.

2) Selling internally usually reassures creditors, banks, customers, and others that there will be some con-tinuity of leadership and skilled management. This can increase the likelihood of getting a deal done, obtaining a fair price, and the ongoing success of the business, which is especially important if the selling owner is getting paid out over a period of time.

3) Business owners are generally independent by nature, and usually like the fact that the business is inde-pendent as well. Selling to the employees allows the com-pany to remain independent, at least in the near term.

4) Selling to the employees rewards some or all employees for their efforts in making the business a suc-cess.

5) By selling to the employees, owners can remain involved in the business for as long as they want and as much as they want.

6) And they can continue to enjoy much of the same regard and respect that they earned from individuals and the community over the years, because employee buyers are likely to care about the business’s reputation and con-tributions to the community.

In addition to the above general benefits, a sale to employees through an ESOP or co-op can result in some significant tax breaks for both the seller and the business. Chief among these are deferral of capital gains for the selling owner, with the potential of a capital gains-free transfer of wealth to the next generation (ESOP and co-op), ability to deduct both interest and principal on the loan transaction (ESOP), and the potential for the busi-ness to become a 100% income tax-free corporation as it moves forward (ESOP).

Obviously, there are a lot of details to be worked through. Some of those can be found on the OEOC web-site, www.oeockent.org. While not applicable for every company and situation, selling to employees can be a powerful tool for the business owner.

A slightly different version of the is article appeared in the BizBox Blog on Slate.com. Thanks to my colleague Roy Mess-ing for suggesting the topic of this article. OAW

The Business Succession Planning Page

The Buyer of Your Business You May Not Have Thought About…

Chris Cooper


Ohio boasts some large and rich plans as well as many small ones. International giant Procter & Gamble dom-inates all three lists. It’s among the top ten for wealth, number of participants, and value per participant, with assets of over $15 billion, almost 45,000 participants, and an average value per participant over $350,000. The roots of its employee stock ownership go back to 1890. Some small firms, however, have done very, very well for their employee owners. For example, tiny Producers Services, with 31 participants, reports a plan value amounting to nearly $700,000 per participant. Producers Services was scheduled to be closed in 1994.The firm’s rebirth was fea-tured in Owners at Work in 2004 (pp.12-14).

Also worth noting is the growth of wealth in the plans. Among plans reporting in 2002-2004, the top ten plans were valued at more than $30 billion. By 2007, that figure had become more than $36 billion.

There were 335 plans with more than 3 participants holding employer stock in 324 companies. The total val-ue of their net assets amounted to over $45 billion, rep-resenting growth of more than triple the rate of inflation from 1994 to 2007. The median plan value was over $3 million, and the median value per participant was nearly $75,000.

The number of ESOP plans in Ohio has remained about stable, but this may be due to an increase in other kinds of employee ownership. Our top 50 don’t include every kind of employee ownerhsip in the state. Some companies have employee ownership through a 401(k) plan that doesn’t report participants’ holdings of em-ployer stock. Other companies have direct stock owner-ship, not through an ESOP or a stock bonus retirement plan, but through direct purchase, stock awards and stock options. Employee ownership through coops also isn’t included. It is small, but expected to grow.

Data for this report were drawn from publicly avail-able IRS Form 5500 reports, as compiled by Larkspur Data Resources. Most reports were from 2007, with a handful from early 2008. Companies known to be sold, closed or known to have terminated their ESOP at the time of publication were eliminated. For companies with more than one plan, the wealth of all plans that covered most employees was combined, but only if they all had the same federal Employer Identification Number. But since IRS data don’t report which employees belong to each plan, and employees might belong to more than one plan, numbers of participants in companies with more than one plan were not combined. We report only the number of participants in the company’s largest plan. In calculating value per participant, there’s no way to tell the value of individual accounts, but since most contri-butions are based on W-2 earnings, some employees will have more and some less than the average. OAW

Ohio’s Top ESOPs and Stock Bonus Plans By Net Assets

1 Procter & Gamble Company $15,051,438,158

2 American Electric Power Corp. $3,185,634,989

3 Macys Inc (2 Plans) $3,025,414,000

4 Parker Hannifin Corporation $2,868,210,171

5 Eaton Corporation $2,798,897,294

6 FirstEnergy Corp $2,568,483,305

7 Goodyear Tire and Rubber (3 Plans) $2,054,185,966

8 KeyCorp $1,775,743,779

9 Sherwin-Williams Company $1,594,775,613

10 Timken Company (5 Plans) $1,110,240,674

11 Fifth Third Bank $1,008,240,427

12 Timken Company $763,078,281

13 Swagelok Company $665,169,360

14 Cintas Corporation $564,630,644

15 Diebold Incorporated $426,720,640

16 Applied Industrial Technologies Inc $397,998,534

17 Polyone Corporation $322,496,237

18 Steris Corporation $272,272,537

19 Advanced Drainage Systems Inc $265,059,399

20 The Lincoln Electric Company $265,052,490

21 Ferro Corporation $206,770,402

22 Jones-Hamilton Company (2 Plans) $449,536,995

23 Garland Industries Inc $141,180,456

24 Chiquita Brands International Inc $125,560,336

25 Third Federal S & L (2 plans) $104,509,106

26 Davey Tree Expert Company $93,382,226

27 Allied Mineral Products Inc $91,706,105

28 Fairmount Minerals Ltd $87,589,172

29 Messer Inc $84,555,773

30 Burke, Inc (2 Plans) $77,983,176

31 Great Lakes Cheese Co Inc $71,006,565

32 Messer Construction Co $68,420,157

33 DPL Inc $65,265,653

34 Park National Corporation $58,118,440

35 Fastener Industries Inc $55,548,278

36 JM Smucker Company $49,739,342

37 Heidtman Steel Products $44,661,238

38 Floturn Inc $43,329,649

39 Automated Packaging Systems Inc $42,916,906

40 DLZ Corporation $40,960,511

41 Perry Corporation $39,401,968

42 Lancaster Colony Corporation $38,771,748

43 Xtek Inc $35,696,406

44 Marfo Company $34,605,116

45 Will-Burt Company $30,241,329

46 Nordson Corporation $27,877,361

47 Cyril-Scott Company $26,569,324

48 YSI Incorporated $23,264,562

49 Richard Goettle (2 plans) $22,858,471

50 Seneca Medical Inc $22,062,780

Ohio’s ESOP Top 50Ohio’s Richest and Largest ESOPs and Stock Bonus Plans


Ohio’s Top ESOPs and Stock Bonus Plans in Number of Employee Participants

1 Macys Inc (largest plan) 109,944

2 The Procter & Gamble Company 42,131

3 KeyCorp 37,900

4 Cintas Corporation 36,036

5 The Sherwin-williams Company 33,696

6 Parker Hannifin Corporation 32,360

7 Eaton Corporation 30,545

8 Fifth Third Bank 26,840

9 American Electric Power Corp. 25,992

10 FirstEnergy Corp 20,813

11 Goodyear Tire & Rubber Company (largest plan) 13,768

12 Huntington Bancshares Incorporated 12,136

13 Timken Company (largest plan) 9548

14 Diebold Incorporated 8938

15 Polyone Corporation 5078

16 Applied Industrial Technologies Inc 4780

17 Davey Tree Expert Company, The 4774

18 Swagelok Company 4289

19 Steris Corporation 4131

20 Advanced Drainage Systems Inc 4013

21 Chiquita Brands International Inc 3964

22 Cardinal Health Inc 3793

23 Provident Financial Group Retirement Plan 3540

24 Lincoln Electric Company 3440

25 Ferro Corporation 2781

26 Park National Corporation 2082

27 Nordson Corporation 2043

28 DPL Inc 1811

29 Great Lakes Cheese Co Inc 1753

30 Stark Truss Company Inc 1450

31 JM Smucker Company 1432

32 Heidtman Steel Products 1258

33 Riesbeck Food Markets Inc 1063

34 Third Federal Savings & Loan (largest plan) 987

35 Lancaster Colony Corporation 925

36 First Place Bank 851

37 DLZ Corporation 850

38 Patio Enclosures Inc 808

39 Automated Packaging Systems Inc 672

40 K O I Enterprises Inc 633

41 United Community Financial Corp 597

42 Seneca Medical Inc 488

43 Chilcote Company 467

44 First Defiance Financial Corporation 448

45 ACRT Inc 430

46 Messer Inc 429

47 Messer Construction Co 404

48 The Cyril-scott Company 376

49 Carestar Inc 365

50 Garland Industries Inc 352

Ohio’s Richest Participants Total Plan Value/Number of Participants

1 Neil M Cornrich & Associates Inc $2,373,653

2 AHG Inc $2,255,201

3 Producers Service Corporation $690,383

4 Strategy Group For Media Inc $515,262

5 Richard Goettle Inc $408,926

6 Garland Industries Inc $401,081

7 Jones-Hamilton Co $362,989

8 Procter & Gamble Company $357,253

9 Fairmount Minerals Ltd $320,839

10 Ketchum & Walton Co $310,003

11 The Richter & Phillips Company $268,417

12 Allied Mineral Products Inc $265,047

13 Buckeye Rubber And Packing Co $252,362

14 Strategic Media Placement Inc $250,802

15 S G Morris Company $250,041

16 Jones-Hamilton Co $243,894

17 Marfo Company $241,994

18 Deco Tools Inc $216,755

19 Richard Goettle Inc $216,402

20 U Brothers Brokerage Inc $212,380

21 Fastener Industries Inc $208,828

22 Messer Inc $197,100

23 Family Chiropractic Inc $192,737

24 Philpott Rubber Company $187,290

25 Akron Hardware Consultants Inc $185,813

26 Perry Corporation $184,986

27 Burke Inc $179,908

28 Messer Construction Co $169,357

29 Ohio Valley Supply Company $168,047

30 Great Lakes Construction Co $162,719

31 Sea-Land Chemical Company $157,771

32 Swagelok Company $155,087

33 Kraft Fluid Systems Inc $154,455

34 Floturn Inc $149,413

35 Webster Industries Inc $144,448

36 WMOG Inc $134,581

37 Hickman Williams & Company $134,180

38 Bowers Insurance Agency Inc $132,301

39 Roush Equipment Inc $126,719

40 Paul J Ford And Company $125,578

41 Pile Dynamics Inc $123,678

42 FirstEnergy Corp $123,408

43 American Electric Power Corp $122,562

44 Goldsmith & Eggleton Inc $121,994

45 Vi-Cas Manufacturing Co Inc $121,474

46 Carbo Forge Inc $120,829

47 Specialty Equipment Sales Co $120,702

48 Edward Howard & Company $119,507

49 First Niles Financial Inc $116,192

50 R E Kramig & Co Inc $116,057


n n Assessment of Strategic Alternativesn n Feasibility Analysis and Preliminary Valuationn n Assisting with Transaction Structuring and Negotiation n n Fairness and Solvency Opinionsn n Litigation Support and Expert Testimonyn n Annual Valuationsn n ESOP Loan Restructuringn n Trustee Advisoryn n ESOP Termination

ESOP & ERISA Advisory Services

Radd L. Riebe216.373.2998 n [email protected] n www.srr.com

Thanks to Our Sponsors

This issue of Owners At Work is sponsored by

The Ohio Department of Development, and its Labor-Management Cooperation Program,

The Cooperative Charitable Trust,

and the sponsors on pages 20-23

Tools to empower people &communities in the global

marketplace• ESOPs, Coops – employee ownership law and transactions• Community and labor fair exchange strategies• Inventor/ labor patent strategies• Place-based businesses

Attorney Deborah Olson has over 28 years’ ex-perience creating and advising employee-owned companies, equity compensation plans and cooperatives, representing companies, trusts, unions and employees. She is executive director of the Center for Community Based Enterprise (www.c2be.org) organizing underutilized local re-sources to create new locally rooted businesses and living wage jobs.

[email protected](313) 331-7821

KSU MBAs Seek Internships in ESOPs

Would your company benefit from doing a special project this summer with the help of an MBA or Undergraduate Business Major Intern from Kent State’s School of Business? Areas of expertise include: Social Media Planning/Development, Information Systems Planning/Development, Marketing Planning, Market Research: Statistical Data Analysis; Analysis of Competitors, Event Planning/Community Involvement, Multicultural and Diversity, and Communication Team Projects

If your answer is yes, contact OEOC staff member, Ashley Hernandez at 330-672-3028 or [email protected].


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GreatBanc Trust Company offers the highest qualityfiduciary services to enhance the financial well being of our clientsand our clients' clients. We are nationally recognized as a highlyskilled independent ERISA trustee specializing in ESOPs and

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For information regarding our ESOP services, please callMarilyn Marchetti at (630) 810-4525

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Karen Bonn at (212) 332-3251We invite you to put the power of GreatBanc Trust to work for you.

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The Power Source

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helped over 1,000 companies to create high involvement

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performance and stock value. If you don’t get a return on

your investment with us in 90 days, we will refund your fee.

Visit www.ownershipthinking.com/events.html to learn

more about our 4th annual conference, “Increasing

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614-571-8826

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303-984-1434

MENKE & ASSOCIATES, The nation's largest ESOP advisor, providing comprehensive

ESOP services for over 30 years to our 2,000 ESOP clients in all 50 states

MENKE & ASSOCIATES, INC. specializes in designing and installing Employee Stock Ownership Plans (ESOPs). We are the nation’s most active firm dedicated to designing and installing ESOPs and have been a leader in the ESOP industry since our inception in 1974. We are one of the few firms in the country providing comprehensive ESOP services, including financial consulting, legal, employee communication, investment banking, and business perpetuation planning.

ESOP Administration Services We are a national firm with six regional offices, providing annual administration / recordkeeping services for approximately 1,000 ESOPs nationwide.

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Relationships are built on many things...

Like providing innovative solutions.Crowe Horwath LLP takes pride in the relationships we have with our clients. In a recent client survey, our clients said we do a better job than our competitors of providing innovative solutions to meet their business needs.

We strive to improve and enhance the ESOP services we provide to our clients with solutions like Crowe ESOP Advantage®, a Web site designed to improve administration and your employees’ understanding of their ESOP.

To learn more, visit www.CroweESOPAdvantage.com, or contact Lori Stuart at 614.280.5229 or [email protected].

Audit | Tax | Advisory | Risk | Performance

Crowe Horwath LLP is an independent member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath International is a separate and independent legal entity. Crowe Horwath LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath International or any other member of Crowe Horwath International and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath International or any other Crowe Horwath International member. Accountancy services in Kansas and North Carolina are rendered by Crowe Chizek LLP, which is not a member of Crowe Horwath International. © 2010 Crowe Horwath LLP

Guide to ESOP Valuation andFinancial Advisory ServicesRobert F. Reilly and Robert P. Schweihs

This book discusses topics related to ESOP employer stock valua-tion, transaction structure, acqui-sition financing, and independent financial adviser issues. This hard-cover book contains almost 600 pages of narrative, checklists, and sample reports—most of which are new from the first edition.

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For questions about this book, or for information about our ESOP services, please contact our national ESOP practice leader, Mike Hartman, at [email protected], or (404) 475-2311

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Robert F. Reilly and Robert P. Schweihs

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South Franklin Street PartnersProvider of capital for Employee-owned companies

South Franklin Street Partners invests junior capital (subordinated debt and non-control equity) in employee-owned, middle-market companies to support existing Employee Stock Ownership Plans (“ESOPs”) or to establish new ESOPs. The support we provide to entrepreneurs and their employee partners extends beyond funding. We enable peoples’ goals for business success. Our experience in growing small businesses as well as our network of contacts are valuable resources to the companies in which we invest.

For more information call (440) 264-8040 or email [email protected]

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WHERE DO YOU WANT TO GO TODAY?

Navigating fiduciary issues can be difficult. ESOP experience is key. Serving more than 250 Plan Sponsors in 37 states, our Trust Administration monitors assets for more than 31,000 participants while distributing annually more than $100 million in retirement benefits. Enjoy the journey with FBTS by your side!

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IS YOUR ESOP PREPARED FOR THE BABY BOOM RETIREMENTS?

Ohio’s Employee-Owned Network Fall 2010 Events

OWNERS AT WORK Summer 2010 Volume XXII No. 1

Ohio Employee Ownership Center 113 McGilvrey Hall Kent State UniversityKent OH 44242

Non-Profit Organization

U.S. Postage PAID

Kent OH 44242

Permit No. 2

RETURN SERVICE REQUESTED

CEO & CFO Networking Dinner, Hosted by Delta SystemsSeptember 14

Board of Directors ForumSeptember 15 ABCs of ESOPs September 9, Toledo, September 23, Cincinnati September 30, Northeast Ohio ESOP Communication & Teamwork September 10, Toledo October 1, Northeast Ohio

How Do I Affect the Bottom Line? September 24, Cincinnati ESOP Fiduciary & Administration ForumOctober 21, Northeast Ohio

ESOP Fiduciary & Administration ForumNovember 18, Southwest Ohio

To register, call the OEOC at 330-672-3028 or email [email protected]

Other Events of InterestJuly 27-30, 2010Association of Cooperative Educators (ACE)Cleveland, OH

see www.ace.coop for details

August 12-14, 2010The Employee Ownership Foundation - Employee Owner RetreatChicago, IL

call 330-672-3028 for details

August 31, 2010The ESOP Association OH/KY & Indiana Chapters - 9th Annual Tri-State ESOP ConferenceLouisville, KY

email [email protected] for details

October 19-21, 2010National Center for Employee Ownership - The ESOP Company Symposium Philadelphia, PA

Call 510-208-1300 for details

Visit our website at www.oeockent.org

Check out the OEOC’s new website

www.oeockent.org

Let us know what you think!

Documents

OWNERS AT WORK - Welcome! - OEOC of an MBA or Undergraduate Business Major Intern from Kent State’s School ... Make each event you plan count and ... OWNERS AT WORK Summer 2010